February 28, 2005
Mr. President, I have come to the floor today to address this pending legislation.
This issue should force us to face a fundamental question about who we are as a country, how we progress as a society, and where our values lie as a people:
How do we treat our fellow Americans who have fallen on hard times, and what is our responsibility to cushion those falls when they occur?
Proponents claim this bill is designed to curb the worst abuses of our bankruptcy system. That's a worthy goal, and we can all agree that bankruptcy was never meant to serve as a Get Out of Jail Free Card, for use when you've foolishly gambled away all your savings and don't feel like taking responsibility for your actions. Business owners and creditors deserve the money they're owed, and anyone who tries to scam the system just because they can should be stopped and forced to pay their debt.
But to accomplish that, this bill would take us from a system where judges weed out the abusers from the honest to a system where all the honest are presumed to be abusers. Where declaring Chapter 7 bankruptcy is made prohibitively expensive for people who already have suffered financial devastation. With this bill, it doesn't matter if you ran up your debt on a trip to Vegas or a trip to the Emergency Room, you're still treated the same under the law and you still face the possibility that you'll never get the chance to start over.
Now, it would be one thing if most people were abusing the system and falling into bankruptcy because they were irresponsible with their finances. But we know that's not the case. We know that most people fall into bankruptcy as a result of bad luck. And we know that a recent Harvard study showed that nearly half of all bankruptcies occur because of an illness that ends up sticking families with medical bills they just can't keep up with.
Take the case of Suzanne Gibbons. A few years back, Suzanne had a good job as a nurse and a home on Chicago's Northwest Side. Then she suffered a stroke that left her hospitalized for five-days. And even though she had health insurance through her job, it only covered $4,000 of her $53,000 hospital bill.
Because of her illness, she was soon forced to leave her full-time nursing job and take a temp job that paid less and didn't offer health insurance. Then the collection agencies started coming after her for hospital bills that she just couldn't keep up with. She lost her retirement savings, she lost her house, and eventually, she was forced to declare bankruptcy.
If this bill passes as written, Suzanne would be treated by the law the same as any scam artist who cheats the system. The decision about whether or not she can file for Chapter 7 bankruptcy would never take into account the fact that she fell into financial despair because of her illness. With all that debt, she would have had to hire a lawyer and pay hundreds of dollars more in increased paperwork. And after all that, she still may have been told that she was ineligible for Chapter 7 bankruptcy.
And so, as much as we'd like to believe that the face of this bankruptcy crisis is credit card addicts who spend their way into debt, the truth is that it's the face of people like Suzanne Gibbons. It's the face of middle-class America. Over the last thirty years bankruptcies have gone up 400% -- and we've had more than 2,100 in Illinois just last year. We also know what else has gone up: the cost of child care and the cost of college, the cost home ownership and the cost of health care - which is now at a record high. People are working harder and longer for less, and they're falling further and further behind.
And we're not talking about the poor or even just the working poor here. As bankruptcy professor Elizabeth Warren has noted, these are middle-class families with two parents who both work at good-paying jobs that put a roof over their heads. They're saving every extra penny they have so that their children can someday do better than they did. But with just one illness, emergency, or divorce, those dreams can be wiped out. This bill does a great job helping the credit card industry recover the profits they're losing, but what are we doing to help middle-class families recover the dreams they're losing?
This bill does a great job protecting credit card companies from the few bad apples who try to escape their debt, but what does it do to protect the American public from the credit card companies who try to take advantage of them?
Mr. President, the bankruptcy crisis this bill should address is not just the one facing credit card companies who are enjoying record profits. We should be addressing middle-class families who are dealing with record hardships.
As Senator Dodd, Senator Feinstein, and others have pointed out, this bill also fails to deal with the aggressive marketing practices and hidden fees credit card companies have used to raise their profits and our debt. Charging a penalty to consumers who make a late payment on a completely unrelated credit card is just one example of these tactics. We need to end these practices so that we're making life easier not just for the credit card companies, but for honest, hardworking middle-class families.
And if we're going to crack down on bankruptcy abuse, we should make it clear that we intend to hold the wealthy and the powerful accountable too. As it is now, this bill makes it easier for a company like Enron who just bilked their employees out of their life savings to declare bankruptcy than for the employees themselves. In my own state, we even had a mining company by the name of Horizon declare bankruptcy and then refuse to pay its employees the health benefits it owed them.
The Mine Workers involved had provided a total of 100,000 years of service and dedication and sacrifice to this company. They spent their lives working hard. They did their part. But Horizon didn't do its part, and it was allowed to hide behind bankruptcy laws to leave these workers without the care they had earned.
This is wrong. It's wrong that this bill would make it harder for these unemployed workers to declare bankruptcy, while doing nothing to prevent the bankrupt company that put them there from shirking its responsibility entirely.
What kind of a message does it send when we tell hardworking, middle-class Americans, "You have to be more responsible with your finances, but the corporations you work for can be as irresponsible as they want with theirs"?
We must reform our bankruptcy code so that corporations keep their promises and meet their obligations to their workers. And while I remain hopeful that our companies want to do the right thing for their workers, doing so should not be a choice - it should be a mandate.
Senator Rockefeller has two amendments to do this that I have co-sponsored and urge my colleagues to support. One would increase the required payments of wages and employee benefit plans to $15,000 per individual from the current level of $4,925. And it would also require companies that emerge from bankruptcy to immediately pay each retiree who lost health benefits an amount of cash equal to what a retiree would be expected to have to pay for COBRA coverage for 18 months. The second amendment would prevent bankruptcy courts from dismissing companies' coal act obligations to pay their workers the benefits they promised them. These companies made a deal to their mine workers, and they should be forced to honor that deal.
Mr. President, this bill gives us a rare chance to ask ourselves who we're here to protect - who we're here to stand up and speak out for. We should curb bankruptcy abuse and to demand a measure of personal responsibility from people. We all want that.
But there are also millions of middle-class families out there who are struggling to get by. They work hard, they love their children, and they're willing to do anything to give them the best possible shot in life. And in the ten minutes since I've been talking, about thirty of them have filed for bankruptcy.
We live in a rapidly changing world with an economy that's moving just as fast. We can't always control this and we can't promise that the changes will always leave everyone better off.
But we can do better than one bankruptcy every nineteen seconds. We can do better than forcing people to choose between the cost of health care and the cost of college. We can do better than big corporations using bankruptcy laws to deny health care and benefits to their employees. And we can give people the basic tools and protections they need to believe that in America, your circumstance is no limit to the success you may achieve and the dreams you may fulfill.
And so, while I cannot support this bill the way it is written, I do look forward to working with my colleagues in amending this bill so that we can still keep that promise alive. Thank you.